When the amount received from the sale of capital asset is less than cost of acquisition plus expenses on transfer can be termed as capital losses. The loss can be earned from any of the Short-Term Capital loss or Long Term Capital loss depending upon the period of holding.
Capital Asset is an asset or property which is held by taxpayer for the investment purpose.
TYPES OF CAPITAL ASSET:
There are two types of Capital Assets which are as follows:
1. Short-term capital loss:
This loss incurred on transfer of asset means an asset which is held for not more than 36 months immediately preceding the transfer.
2. Long term capital asset:
This asset means an asset which is held for more than 36 months or 24 months or 12 months (in case of shares or equity funds) as the case may be.
3. CONDITION FOR TAXATION ON CAPITAL loss
The taxpayer must be the real owner of capital asset.
- There shall be transfer of capital asset.
- There shall be loss on transfer of such assets.
TREATMENT OF CAPITAL LOSSES ON SALE OF SHARES OR EQUITIES
If you have incurred a loss on selling shares, equities, or mutual fund units then you can set them set off against any Long term capital Gains. You can also carry forward these losses for setting off up to 8 assessment years. Prior to 31.03.2018, tax was not applicable on long term gains on shares & equity funds, therefore these losses were considered as a dead loss. But after 31.03.2018 it is Mandatory to show the profits or loss on sale of equity shares in ITR 2 under the head income from capital gains.
SET OFF OF CAPITAL LOSSES
Any losses incurred from the sale of shares can be only set off under the head ‘income from Capital Gains. Long Term Capital Loss can be set off only against Long Term Capital Gains. Whereas Short Term Capital Losses can be set off against both Long Term capital Gains and Short Term capital Gains.
Carry Forward of Losses
If the amount of loss cannot be set off entirely in one financial year, you are allowed to carry forward for 8 assessment years immediately following the assessment year in which the loss was first computed. If capital losses have arisen from a business that it not in existence, you can still carry forward such losses for consecutive 8 years.
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Under Schedule CG of ITR-3, I have STCG loss of for positional trading (within Equity share on which STT is paid under section 111A). Since the profit is negative, I am not able to input quarterly negative values under the section F (Information about accrual/receipt of capital gain). The ITR-3 filing would show an error during the verification at the end and would not allow to file the ITR return. How to do.
during the year 2022-23 I have short-term cap.gain of Rs.97000/- and long-term cap.loss is Rs.65000/-. I shall be grateful if you pl.advice for how much amt. I have to pay tax.